Q2 There was a significant loss reduction over the previous month
In 2023, Qingsong Co., Ltd. achieved revenue of 924 million yuan (yoy -34.75%) and net profit of 61.57 million yuan (22H1 loss of 159 million yuan) in H1. Q2 achieved revenue of 527 million yuan (yoy -27.70%, qoq +32.70%), net profit to parent - 13.65 million yuan, net sales interest rate - 2.57% (Q1 loss of 47.92 million yuan, net sales interest rate -12.03%). Northbell stepped up management changes and process restructuring. By further optimizing production processes, streamlining personnel, improving efficiency, and reducing production costs, Q2 began to reduce losses. If industry demand warms up in the second half of the year, there is a possibility that the company's performance will be further repaired. It will take time to consider that the capacity utilization rate will rise, order demand will still need to warm up further, and short-term performance may still be under pressure. Lower the forecast. It is estimated that EPS-0.12/0.29/0.36 yuan in 23-25 (previous value was 0.36/0.42 yuan in 23-24).
Comparable companies, Wind, unanimously expected an average PE value of 22 times in 24 (considering the comparability of business models and the introduction of new raw materials and foundries). Considering that the added value of the foundry industry chain is relatively low, the company was given 20 times PE in 24, with a target price of 5.8 yuan (previous value of 9 yuan) to maintain “increase in holdings.”
Order demand in the cosmetics business is yet to recover
The company completed the divestment of the turpentine deep processing business at the end of 2022, from the two major business segments of cosmetics manufacturing and turpentine deep processing to a single cosmetics business. Affected by the macroeconomy and industry environment, demand for face masks and skincare products from some of the company's customers is still yet to recover. 23H1 cosmetics business has revenue of 923 million yuan/yoy -3.98%, of which mask revenue is 340 million yuan/yoy -3.43%, gross profit margin is 7.62% /yoy4.61 pct; skincare revenue is 286 million yuan/yoy -2.39%, gross profit margin 5.13% /yoy2.84pct; wet wipe revenue is 147 million yuan/yoy -26.91%, gross profit margin 10.84% /yoy8.23pct, mainly due to further weakening demand for wet wipe products in overseas markets.
Cosmetics subsidiary Northbell 23H1 reduced losses
23H1 Northbell achieved operating income of 919 million yuan/yoy -3.93%; operating profit - 605.645 million yuan, a year-on-year loss decrease of 48.89%; gross profit margin of 7.18% /yoy4.60 pct; realized net profit attributable to Northbell owners' equity - 53.6121 million yuan, a year-on-year loss of 47.77%. 23H1 Northbell has increased management changes and process restructuring. By further optimizing production processes and streamlining personnel, production and management efficiency has been improved, and production costs have been reduced.
Risk warning: Demand is sluggish; cosmetics business restoration progress is slow, and performance is difficult to release.